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Energy

Brazil looks at temporary quota for tariff-free ethanol imports -report

BRASILIA, Sept 1 (Reuters) - Brazil is studying the resumption of a zero-tariff quota for its ethanol imports, but only for three months, aimed at getting the United States to negotiate better access for Brazilian sugar, Valor Economico newspaper reported on Tuesday.

Brazil allowed a non-tariff quota for imports of 750 million liters per year of ethanol to expire on Monday, which will result in U.S. producers having to pay a 20% tariff.

The tax-free import quota was used entirely by U.S. corn ethanol producers, who were happy to sell to Brazil to make up for low sales due to the coronavirus pandemic.

The U.S. farm lobby has asked President Donald Trump to press for the non-tariff quota’s renewal, which he has done given some ethanol states are key to his re-election.

But Brazil’s farm sector has lobbied President Jair Bolsonaro’s government to drop the ethanol import quota or get something in return.

Government officials did not respond immediately to a request for comment.

The temporary quota, which could be decided at any moment, aims to bring the Americans to the negotiating table.

“The goal is to signal to the United States a desire to negotiate the continuity of preferential access for American corn ethanol in exchange for commercial concession from the White House,” Valor reported, citing government officials.

The concessions would include better terms for Brazilian sugar exports to the U.S. market and reversal of a recent reduction in the quota for semi-finished steel from Brazil as the Trump administration moved to protect battered steelmakers and jobs in election battleground states.

The U.S. Trade Representative’s office said on Monday it was reducing Brazil’s remaining 2020 quota for semi-finished steel exports to the United States to 60,000 metric tons from 350,000 tons “in light of recent deterioration in market conditions brought on by the COVID-19 pandemic.” (Reporting by Anthony Boadle; Editing by Dan Grebler)

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